What the Mortgage Backed Securities Market is Doing Today:
The FNMA 30-Year 5.0% Coupon opened down this morning 9/32 to 101.71 on signs the decline in housing prices is beginning to wane.
The price of the FNMA 30-Year 5.0% coupon closed yesterday up 5/32 to 102.00 (as shown by the white line). The MBS was down as much as 11/32 this morning, but is currently trading down 7/32 to 101.79 (as shown by the blue line). Remember, on mortgage backed securities (MBSs), as the price goes down, the yield goes up - and so do mortgage interest rates. I expect that mortgage rates will be 0.125% - 0.25% worse in price this morning as compared to yesterday.
Economic Reports Being Released Today:
- Consumer Confidence Index (CCI) for June - The Consumer Board's consumer confidence index reading came in at 49.3, much lower than expected, and is down from the 54.9 reading last month. Analysts were expecting a reading of 57.0. The lower readings are attributed to the high rate of unemployment and higher gasoline prices. This report measures the attitudes of consumers on present and future economic conditions and their willingness to spend - and that's important because consumer spending makes up two-thirds of the U.S. economy. Because pf the decrease in the confidence reading from the previous month, bond prices may rise from its lows of the morning, and mortgage rates may fall slightly.
Important News of the Day:
Case-Shiller Home Price Index reported that home prices are still falling, but the rate of decline is moderating, which is good news for the housing market. Home prices in April were down just 18.1% year-to-year, as compared to March when it was down 18.7%, thus showing a 0.6% improvement. As of April of this year, the prices of homes are back to the levels they were in the middle of 2003.
In today's release, David M. Blitzer, Chairman of Case-Shiller Home Price Index, said, "While one month's data cannot determine if a turnaround has begun; it seems that some stabilization may be appearing in some of the regions." He added: "We are entering the seasonally strong period in the housing market, so it will take some time to determine if a recovery is really here."
There are five economic reports scheduled for release this holiday shortened week, but four of them are considered only fairly important. And of those four reports, the employment situation report, to be released Thursday morning, is considered the most important. The markets are closed on Friday. Look for more details on this week's economic data releases and events on my Weekly Mortgage Market Watch at www.LewCorcoran.com/MyBlog.
What Happening With Mortgage Rates Today:
High Volatility. Overall, we can expect to see some volatility in the markets and in mortgage rates today through Thursday. However, we could see the highest volatility on Thursday. The reasons are: 1) the report on the rate of unemployment will be released in the morning; and 2) trading in afternoon will probably be light as traders leave early for the long weekend. I recommend that you maintain contact with your mortgage professional this week if you're still floating an interest rate and are getting close to settlement.
In addition, the spring and summer home buying season is upon us. Mortgage rates historically climb this time of year before peaking in July or August. If you haven't locked in a rate yet, then you may want to consider doing so. Floating is making more sense in the short term right now as the markets recover from the dramatic sell off over the past few of weeks, but the ever increasing massive government debt and fears of inflationary pressures could soon drive rates up again. So, if you like the rate that you are being offered today, then there's nothing wrong with locking in. Otherwise keep an eye on the markets and maintain contact with your mortgage professional. The markets can change at any moment.
My Interest Rate Lock Advice for Today:
If I were considering financing/refinancing a home, I would...
- Lock if my closing was taking place within 7 days
- Float if my closing was taking place within 8 and 30 days
- Float if my closing was taking place between 31 and 60 days
- Float if my closing was taking place over 60 days from now
This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of any or all other borrowers. See today's mortgage rates at www.LewCorcoran.com/RateSheet.
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